PRECIOUS-Gold falls as dollar bounces from 6-1/2-month lows

* Gold awaiting further word from Fed on rates -analyst

* Platinum hits highest price in nearly a month

* Silver touches three-week high

(Adds comments, updates prices, adds NEW YORK dateline) NEW YORK/LONDON, May 23 (Reuters) - Gold prices fell on Tuesday, as the U.S. dollar rebounded from 6-1/2-month lows and investors shrugged off heightened political risk following a deadly suicide attack in Britain. The blast at a concert hall in Manchester, which killed at least 22 people, prompted the U.S. dollar to gain against

sterling but failed to move gold higher. A stronger

dollar makes bullion more expensive for holders of other currencies. The dollar had fallen sharply against a basket of

currencies recently, but rose on Tuesday as some traders

booked profits. "Gold is taking a breather once again; it's struggling to make it out of this $1,245-$1,265 range," said Ole Hansen, head of commodities strategy at Saxo Bank. "Unless we get other developing (political risk) stories, the market is not prepared to break this range until further guidance from the Federal Open Market Committee," he said, referring to the U.S. central bank's policy-setting committee.

Spot gold was about 0.7 percent lower at $1,250.93 an

ounce by 3:27 p.m. EDT (1927 GMT), having gained about 3 percent since May 9 when it tumbled to near a two-month low. U.S. gold

futures settled 0.5 percent lower at $1,255.50 an ounce.

"With nearly two-thirds of Q2 2017 out of the way, QTD gold prices have averaged within 0.2 percent of our Q2 2017 price forecast ($1257/oz versus $1259/oz)," RBC Capital Markets said in a note. "While prices may trade away trough the balance of the quarter, we remain confident in a slight upward skew in prices on average (driven by unanticipated risks)." Gold has been supported by weakening U.S. economic data and troubles facing U.S. President Donald Trump, all of which have weighed on the greenback. Still, Fed fund futures were up, showing a 75 percent chance of an interest rate increase next month, which deterred investors from pushing gold higher. Separately, Wall Street ticked higher as the Trump administration's budget proposal called for slashing healthcare programs and boosting military spending. European shares advanced on encouraging economic data that helped to lift the euro to a six-month high against the dollar.

Silver was down 0.4 percent at $17.05 an ounce,

having touched a three-week peak of $17.30 earlier.

Platinum fell 0.2 percent to $944 an ounce after

hitting $957.50, its highest level in nearly a month.

Palladium rose 0.3 percent to $772.6 an ounce, having

dropped to more than a two-month low in intraday trading on Monday before ending that session up 1.5 percent, its biggest one-day gain since April 20.

(Additional reporting by Vijaykumar Vedala in Bengaluru; Editing by David Goodman and Paul Simao)